The skilled labor shortage remains the key limiting factor to expanding home construction and improving housing inventory and affordability, according to the Home Builders Institute (HBI).
According to the Spring 2023 HBI Construction Labor Market Report, the construction industry needs to add approximately 723,000 new workers each year to meet demand and help combat the nation's estimated 1.5 million home shortage.
While demand for construction is weakening due to a slowdown in housing construction, the HBI projects an estimated uptick in housing production in 2024 will only exacerbate the labor shortage. According to survey data cited by the HBI, at least 90% of single-family builders reported a shortage of carpenters, and 80% to 85% reported a shortage of subcontractors in six other trades. More than 80% of remodelers reported a shortage of subcontractors in 11 of 16 trades surveyed by the NAHB.
HBI president and CEO Ed Brady says the construction industry must focus on promoting training and jobs in the trades to those who have not yet considered a career in construction to close the labor gap. Efforts should be targeted toward high school students as well as veterans, transitioning military personnel, justice-involved youth and adults, and displaced workers. Brady says it is also important for the construction industry to advocate for housing affordability by demonstrating the direct link between the housing and labor shortages.
Women represent a growing share of construction employment, reaching a new record high of 11% in the most recently available data from 2021, an increase of 1.9% in four years. Hispanics represented 31.5% of the construction workforce in 2021, significantly higher than an 18.8% share of Hispanics across all other industries in the United States. The HBI says Black and Asian workers continue to be underrepresented in the construction industry, accounting for 5.9% and 1.6% of the labor force, respectively.
According to the HBI, the concentration of immigrant workers is high in many trades associated with the home building process, including plasterers and stucco masons (56% of workforce), drywall/ceiling tile installers (52%), roofers (48%), painters (47%), carpet/floor/tile installers (43%), and construction laborers (38%). Given the importance of immigrant workers to the construction workforce, Brady says the construction industry should support immigration reform “designed to produce the next generation of new Americans seeking opportunity in the United States.”
A parallel problem to the construction industry’s recruitment challenges is the aging existing construction workforce. According to the HBI, the median age of workers in construction is 42. However, the share of construction workers ages 25 to 54 decreased from 72% in 2015 to 67.7% in 2021. Workers 55 or older account for 22.3% of the construction workforce, while workers younger than 25 comprise just 10% of the construction industry.
The HBI’s report highlighted hourly wages as a potential tool that could be used to help recruit laborers to the industry. The average hourly earnings in construction has increased 5.4% in the past 12 months and is approaching $36 per hour. The hourly rate compares favorably to the private sector, which has an average hourly earnings of $33.20, and transportation and utilities, with an average hourly earnings of $27.67.
